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Forums - Nintendo Discussion - Nintendo Q1 - $221m loss on of revenue $1.08bn. Shipments: 1.86m 3DS, 710k Wii, 540k DS

gumby_trucker said:
Kynes said:
The problem is most users don't want to know, or don't care, about these things. They only want their console of preference to sell the most, without knowing the implications of a price cut.

The most pressing matter at hand here is the launch price of Wii U, isn't it?

If I understood Nintendo's financial breafing correctly they have lost what amounts to $355 million (27.7 billion yen) due to changes in the exchange rate.

This is a horrendous amount of money but not exactly threatening to the company, at least not yet.

I get the feeling it´s gonna be $300, no more no less.



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Kynes said:

That number is changes in the exchange rate to what they predicted, if I'm not wrong, so if they predicted for the year an exchange of 110, but the exchange was 90, the income difference is 355 million US$. I think most of the huge losses Nintendo had last fiscal year come from the exchange rate, and the 3DS price cut, as they had to sell them at a loss. Look at the cost of Nintendo consoles and games in Japan, they have compensated the losses outside Japan with good revenue in their homeland, where they don't have problems with the exchange rates.

It's not impossible to see here a Wii U launch cost in EUR/US$ that isn't as we used to see, with a cost of 25000 JPY, but 300 US$/€, not 250.

In my opinion $300 will be cheap enough to sell out of initial shipments this year, especially if Nintendo include the right software. Do you think they could break even at that price?

Furthermore, aren't there other ways to deal with the exchange rate? For example wouldn't it be wise to examine the option of letting NoA and NoE hold on to their revenue in the form of some kind of short term investment (say, up to a year) in the hopes that the exchange rates will be more favorable by then?

Why suffer two exchanges if you can get by with one in the short term? 



Until you've played it, every game is a system seller!

the original trolls

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The short term investments have grown a lot the last year, as the table Kowenicki provided in this same thread show, so it's probable that they are doing that. The problem lies in not improving exchange rates, and you need to import that money, then you have to take huge losses. I think the last year huge write off Nintendo had to do was partly/mostly due to this.

I'm not sure that the exchange rates are going to improve, we Spaniards are doing our best to destroy the Euro, and the quantitative easing programs by the Fed are diluting the $ value, so if the Japanese government doesn't do the same, printing tons of yens to decrease it's value, Japanese export companies are screwed. I don't like this type of policies, they are suffering what it's known as a competitive devaluation, but not one of the nineties where some governments declared a huge devaluation on a Saturday, they are doing now without telling us. We're now in a cold currency war.

We can have a situation where 25000 yens cover the break even point, but 300 $/€ don't.



Kynes said:

The short term investments have grown a lot the last year, as the table Kowenicki provided in this same thread show, so it's probable that they are doing that. The problem lies in not improving exchange rates, and you need to import that money, then you have to take huge losses. I think the last year huge write off Nintendo had to do was partly/mostly due to this.

I'm not sure that the exchange rates are going to improve, we Spaniards are doing our best to destroy the Euro, and the quantitative easing programs by the Fed are diluting the $ value, so if the Japanese government doesn't do the same, printing tons of yens to decrease it's value, Japanese export companies are screwed. I don't like this type of policies, they are suffering what it's known as a competitive devaluation, but not one of the nineties where some governments declared a huge devaluation on a Saturday, they are doing now without telling us. We're now in a cold currency war.

We can have a situation where 25000 yens cover the break even point, but 300 $/€ don't.

I discussed  these same investments with Kowenicki earlier in the thread. I'm no economist but I too believe they are trying to offset their losses by some kind of off-shore investment, which could also help weaken the yen if they move enough of it (according to the briefing they have already moved  ~1.6 billion dollars of their cash into securities). Another major difference from last year's numbers is that significantly less capital is in the hands of NoA, so that could also be part of Nintendo's attempt to rebalance their finances. 

If the exchange rates continue to get worse for them, how do you think they should price Wii U in each region in order to break even on a global level?

Also, suppose a worst case scenario unfolds where they find themselves sitting on another 3DS during the system's first year? Granted this appears less likely because there is already a 2D Mario confirmed for the launch window, but suppose they have to cut the price, or that they simply aren't able to break even at a reasonable price to begin with?

What kind of doomsday scenario should Nintendo be preparing for?



Until you've played it, every game is a system seller!

the original trolls

Wii FC: 4810 9420 3131 7558
MHTri: name=BOo BoO/ID=BZBLEX/region=US

mini-games on consoles, cinematic games on handhelds, what's next? GameBoy IMAX?

Official Member of the Pikmin Fan Club

Will be pretty interesting to compare 3DS to PS3 numbers over 10 days.



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They should prepare to a scenario where a Wii U selling at 350€ makes them lose money. I would bet that 300 €/$ is going to be the MRSP, but I wouldn't discard 350.



Jesus I knew the currency was bad but wow. America and Europe are in a fucking freefall.



Kynes said:

They should prepare to a scenario where a Wii U selling at 350€ makes them lose money. I would bet that 300 €/$ is going to be the MRSP, but I wouldn't discard 350.

so $300 - $350 (300-350 € ) is where the final price will likely be in your opinion?

Another thing we know is Nintendo are making every possible effort to cut costs that aren't essential. I think this is the reasoning behind not including a power adapter with the XL in Japan and Europe. There have also been strong hints (from Nintendo of France) that wiimotes will not be bundled with the Wii U, allowing them to cut back further on price and storage volume.

If they could afford to launch the hardware with no bundled software besides the OS it would definitely help them reach the break even point since nobody will buy a console without at least one game. I imagine this is something they can afford to do in Japan (like they did with Wii) but the remaining regions may not find it acceptable.

At the very least they can launch with a download ticket instead of a physical copy of bundled software, although this may be an insignificant saving.



Until you've played it, every game is a system seller!

the original trolls

Wii FC: 4810 9420 3131 7558
MHTri: name=BOo BoO/ID=BZBLEX/region=US

mini-games on consoles, cinematic games on handhelds, what's next? GameBoy IMAX?

Official Member of the Pikmin Fan Club

theprof00 said:
Jesus I knew the currency was bad but wow. America and Europe are in a fucking freefall.


The freefall is of their currencies, their economies aren't in the best shape, but they aren't that bad (at least most of the countries)

I just hope that this thread helps lessen the bitching we have in other financial threads, when some people question some actions made by some companies and get attacked by some other people that don't understand the consequences of these actions...



I don't believe Nintendo will post a profit this quarter. The situation in Europe is only deteriorating and will further impact Nintendo's financials as a whole. The strengthening yen is not helping their financials as well. The only sector in the world where Nintendo is doing well currently, is in its native country, Japan. However, I believe going forward, Nintendo will be fine as we enter the holiday season soon with the Wii U, Pokemon, and 3DS XL releases. It should post extremely good results then.

By the way, good on Nintendo for cutting costs. Most of the consumers Nintendo are targeting are people who mostly own DS or 3DS in my opinion and they already have the adapter. Furthermore, I don't believe the Wii + Nunchuck remote should be included in the Wii U release. When I buy a console, I get one remote and that would be the Gamepad. If people complain, then shame on them really.